THE Inland Revenue has failed to send out thousands of tax reminders – because it has run out of paper.

The astonishing blunder means up to half a million people may forget to pay their final demands by next Sunday’s deadline.

Four times more people than last year owe money on bills that should have been settled in January.

They were expected to stump up by July 31 but tax chiefs did not order enough paper for reminder letters.

Now those taxpayers have been given extra time to pay.

An insider at Her Maj­esty’s Revenue and Customs said: “It is a shambles. They have literally run out of paper to send out the reminder letters.” Embarrassed revenue bosses admitted the blunder in a memo to accountants on Friday.

Anita Monteith, a tax manager at the Institute of Chartered Accountants, said it was another sign of a failing service.

She added: “Staff cuts are to blame. They had 90,000 staff in 2005, that is down to 70,000 now.”

Taxpayers who have not received a reminder have 30 days to pay from the date it is delivered.

A spokesman for Revenue and Customs said: “We very much regret any i­nconvenience.”